Sony and NEC to merge their Optical Disk Drive Businesses

Sony and NEC to merge their Optical Disk Drive Businesses

Technology giants Sony and NEC have announced that they are entering into a joint venture and this would combine Sony’s present optical disk business with NEC’s DVD disk drive business. Sony’s optical disk business is currently worth around $1.26 billion while NEC’s DVD division is worth around $589 million.

The aim is to become the global leaders in the optical disk drive manufacturer market. They have yet not named their joint venture, which is due to start functioning from the April 1 next year. Sony would hold a controlling 55 percent stake in the JV and NEC a 45 percent stake. The president of the new company would be appointed by Sony while NEC would choose its Vice President.

The interesting factor of this deal is that the two companies are part of the competing group aiming to decide the next generation DVD storage format. While Sony is the developer of the next generation Blu-Ray DVD format, NEC is supporting the Toshiba’s HD DVD format. Sony has said that the combined group would be producing HD DVD drives that NEC has already received orders for. However, after that it would be the decision of the combined group on which format to support.

Looks like this venture brings more bad news to Toshiba, which is already left with few partners supporting the HD DVD format for next generation DVD drives. NEC on their part have clarified that they are still in support of the HD DVD standard and their merger with Sony is basically to boost present CD and DVD business.

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